THE Agricultural Rural Development Authority’s (Arda) financial records are in shambles, with Auditor-General (AG) Mildred Chiri giving an adverse report for three consecutive years, 2011, 2012 and 2013.
by VENERANDA LANGA
An adverse opinion is the worst opinion as it indicates that a company’s financial statements are misrepresented, misstated, and do not accurately reflect its financial performance and health. Arda also made losses during those three years amounting to $22 million, with financial records for two of its key estates, Sanyati and Katiyo, not even availed for audit to the AG, an issue that may point to irregularities and fraudulent activity in the manner they were managed during those years. During those three years in question, Arda’s current liabilities also exceeded its current assets by $3 237 881 in 2013, $10 203 142 in 2012 and by $8 963 549 in 2011.
“These conditions indicate a material uncertainty which may cast significant doubt on the ability of the entity to continue as a going concern,” the AG said.
In finance, if current liabilities exceed current assets of a company, it means the company is insolvent and the net worth of the business is negative, which also means the business has no working capital.
“For the three consecutive years, Arda made losses totalling $22 988 102. In 2011, the operating losses amounted to $6 985 242. In 2012, the loss was $6 387 861, while in 2013, Arda incurred a loss of $5 730 825.”
On Sanyati and Katiyo estates, the AG said financial records for the period 2011 to 2013 were not availed for audit. “Arda management represented that a proper handover and takeover exercise was not performed when Sanyati Estate’s accountant left the employment of the estate. The risk of misstatement of the financial statement and irregularities and fraud may not be detected in the absence of financial records,” the AG said.
Arda management then responded to the AG saying the estates were under a joint venture during the years in question, which suffered a stillbirth due to various technicalities. “Among them is that our 51% equity value based on assets transfers and values thereof were not concluded completely and, hence, financials were not prepared for the period 2011 to 2013 by the partner (Gameloft Investments),” Arda management said.
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Chiri said management should evaluate the operations of each and every estate and operational centre to determine if they were contributing positively to the authority and consider downsizing loss-making and non-strategic operations and estates.
